================================================= ACC 422 Week 3 DQ 1
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During 2005, Ichor purchased equipment costing $ 50,000 and sold equipment with a carrying value of $ 9,000.
38. On January 1, 2000, Nobb Corp. signed a 12-year lease for warehouse space. Nobb has an option to renew the lease for an additional 8-year period on or before January 1, 2004.
39. On April 1, 2004, Kew Co. purchased new machinery for $ 300,000. The machinery has an estimated useful life of five years, and depreciation is computed by the sum-of-the-years '-digits method. The accumulated depreciation on this machinery at March 31, 2006 should be:
40. A manufacturing firm purchased used equipment for $ 135,000. The original owners estimated that the residual value of the equipment was $ 10,000. The carrying amount of the equipment was $ 120,000 when ownership transferred. The new owners estimate that the expected remaining useful life of the equipment was 10 years, with a salvage value of $ 15,000. What amount represents the depreciable base used by the new owners?
41. What is the total R & D cost that will be expensed when incurred?
================================================= ACC 422 Week 3 DQ 1
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Week 3 – DQ 1 What is the purpose of depreciation? Does the book value of a fixed asset( cost minus accumulated depreciation) communicate to a user what the asset is worth? Explain why or why not. Should the financial statements reflect the value of fixed assets? Explain why or why not. ================================================